Is Europe’s cure for wireless “bill shock” right for the US?

The US government is looking to Europe for a cure to wireless "bill shock," …

This year the European Union put the kibosh on tourists and travelers getting hit with €8,000 to €31,500 mobile Internet bills if they happen to download a TV show in the wrong neighborhood in France. EU-governed mobile companies must offer consumers a monthly cut-off limit for roaming broadband access. Once their bill goes past that sum, they'll be informed that their wireless connection to the Internet has been temporarily blocked, and asked how they want to proceed.

The Federal Communications Commission thinks the EU's cure for "bill shock" might not be a bad idea for the United States, too. "We seek to gather information on the feasibility of instituting usage alerts and cut-off mechanisms similar to those required under the EU regulations," an FCC Public Notice announced on Tuesday.

"We are hearing from consumers about unpleasant surprises on their bills," added Joel Gurin, Chief of the FCC’s Consumer and Governmental Affairs Bureau. "We've gotten hundreds of complaints about bill shock. But this is an avoidable problem. Avoiding bill shock is good for consumers and ultimately good business for wireless carriers as well."

The agency also wants intel on the kind of bill overrun alert services that US carriers already provide. Complaints to the FCC's call center include laments such as these:

"My [cell phone] bill suddenly tripled in one month... When I got to looking it over, I noticed that they had charged me for my mobile to mobile minutes. They had advertised free mobile to mobile."

And:

"I recently updated my wireless plan in Sept 09. Since I upgraded my plan, my bills have been outrageous. I was informed... that my rollover minutes were taken away when I changed my plan... I was never informed this would affect my rollover minutes and have thus racked up hundreds of dollars in overages at $.45 a minute."

Striving to serve

Armed with these quotes, the Commission says it is giving serious thought to the new EU system. "Specifically, we seek comment on whether technological or other differences exist that would prevent wireless providers in this country from employing similar usage controls as those now required by the EU," the agency's notice also asks.

Not surprisingly, the announcement received a cool response from CTIA - The Wireless Association. "We look forward to educating the Commission on all of the carriers' activities and offerings so that customers can stay informed," the statement CTIA sent us notes, adding that consumers can already get lots of intel on their usage by texting in phrases like "*MIN, *BAL, # MIN," and "#DATA" on their phone, or checking their account on the Web.

"Even though the 'hundreds of complaints' that the Public Notice references is less than four ten-thousandths of a percentage of the industry's total subscribers, the industry strives to serve and provide all of our 285 million customers with the necessary tools to have a positive experience," the statement concludes.

Here and there

There does seem to be a bit of an apples-and-oranges problem here. Nobody likes losing their rollover minutes or seeing their bill triple. But the EU's "bill shock" stories go way beyond that. We're talking about a British exchange student who mostly used Skype in Paris and wound up with a £7,648.77 receipt for his trouble. The top shocker goes to a traveling video downloader who picked up a £31,500 receipt for a single program.

The problem in Europe is that travelers often find their credit cards plucked by "nonpreferred" data networks when their signals aren't strong enough to link to more affordable ("preferred") ones. Nonpreferred services, knowing that dongle and tether-to-mobile equipped laptops have no choice at the moment but to access them, sometimes charge at prices 30 times higher than preferred networks.

That's why we're hearing about these super sized Euro-mobile bills. The EU's solution is that, effective July 1, carriers must block further data consumption when a consumer's monthly bill tops €50. That's just the default rate—mobile customers can pick whatever price limit they want. Whatever number they choose, they'll also get a warning when their tab has reached 80 percent of the figure.

Still, whatever the differences, it can't hurt to look into this way of making sure US consumers know that their wireless data plan is moving into the red. As helpful as #MIN, *BAL, and the rest of those codes are, mobile customers don't want to continually text their carrier to find out whether they're in for a surprise.

Verizon is rolling out an interesting workaround to the EU roaming problem, by the way. The carrier calls it Global Fixed Mobile Convergence. When a consumer makes a call, Verizon's application reroutes it to the telco's VoIP system. The platform then calls the user back and runs the call to whoever the consumer wants to reach.

Thus, the call that the user makes appears to the carrier to be incoming rather than outgoing. The provider consequently charges the customer a much lower rate.

Bottom line: "When roaming, we flip the call from international roaming origination to a termination call, and that will deliver some significant cost savings to the customer," explained a Verizon Business division manager.

Matthew Lasar
Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz. Emailmatthew.lasar@arstechnica.com//Twitter@matthewlasar

36 Reader Comments

I like this idea. 99% of the time I'm for the free market. I go for free market choices of wages, prices, etc, but these phone bills are clearly abusive. We can have an almost-free market where people have to be given the option to cap their expenses before at least being informed of their situation.

p.s. Verizon has a great plan. I never thought of those folks as pro-consumer before. My guess is that they still aren't pro-consumer when it's their own money on the line instead of avoiding paying a third party.

The obvious solution is for the wireless companies to stop dicking people over with confusing (at best, predatory at worst) billing practices and poorly-outlined terms. Until all cell phone plans are charged flat rates for unlimited minutes, texts, and data, these kinds of "unfortunate incidents" will continue, with the wireless providers laughing all the way to the bank. Let's get some fucking regulation up in this bitch.

So, if they mandated that the user gets a pop-up telling them how much per-minute they're going to be charged for the call, who's network they're using, etc, etc...and all that info was kept in a log file on the comp, so the customers could keep it as evidence in case they later get a bill stating otherwise ... this might take care of itself before it even starts.

That's why we're hearing about these super sized Euro-mobile bills. The EU's solution is that, effective July 1, carriers must block further data consumption when a consumer's monthly bill tops €50. That's just the default rate—mobile customers can pick whatever price limit they want. Whatever number they choose, they'll also get a warning when their tab has reached 80 percent of the figure.

Sounds reasonable to me. Government is not doing anything but empowering consumers to set a ceiling for what they're charged.

There does seem to be a bit of an apples-and-oranges problem here. Nobody likes losing their rollover minutes or seeing their bill triple. But the EU's "bill shock" stories go way beyond that. We're talking about a British exchange student who mostly used Skype in Paris and wound up with a £7,648.77 receipt for his trouble. The top shocker goes to a traveling video downloader who picked up a £31,500 receipt for a single program.

There's no reasonable way any company can justify those charges for a single user. I know mid sized business owners that don't pay that much to keep all of their employees under a company cell plan. £31,500, shenanigans I say.

How about not charging 5 to 8 cents per minute for the time in your plan and then 40 cents per minute for the overage. The first 700 minutes might run $60, but with the overage the bill doubles at only 150 minutes over. Similar, if not worse, math applies to texting and data.

In other words you can prevent bill shock by not screwing the customer. A good first step is making the plans easier to understand without a spreadsheet and a crystal ball.

I don't think we need to mandate a specific solution, like cutting off access. I think there should be a general law stating that you can't stick a customer with a huge bill, much larger than expected, without specifically warning them before they incur the charges. Small print in a contract doesn't count. If they do try try to bill you, then the customer should have no obligation to pay the amount in excess.

The companies could implement this however they want. They could choose to suspend service, but I think there are better solutions. They could either have sane overage charges to begin with, or send you an automated text and/or voicemail when you are about to exceed your monthly limit. Same when you switch to roaming in an area with high charges. Either don't connect to such towers or warn the user first.

This law should apply to all companies not just phones. For example, if you get an estimate for repair and then the bill is ten times that amount because they found more things that needed to be done but didn't bother to check with you first. It is the same basic thing.

so ... do they provide free use of the #MIN *BAL etc commands, or do they charge the same extortionate rates as normal texts?

Sorry to be harsh, but what are you thinking that pay exorbitant rates for texting? We pay $30 a month for 5 people unlimited texting to anyone anytime. It works out to like a penny a text (I have a teenager!). For $5 a month you can get 250 texts.

Instead, the telco execs should be prosecuted for price fixing. Simple as that. These billing practices are totally out of control, and the market would have fixed them already if not for an obvious agreement amongst the major players. Why is it that there's no competition between T-Mobile's and Vodafone's European roaming tariffs? Roaming to the telcos is mostly free, especially for the big guys like T-Mobile where you're going online with the same company in Germany, Switzerland and the US. Yet, you don't see market forces at work.

Sorry to be harsh, but what are you thinking that pay exorbitant rates for texting? We pay $30 a month for 5 people unlimited texting to anyone anytime. It works out to like a penny a text (I have a teenager!). For $5 a month you can get 250 texts.

it's 20c/message if you're not on one of those plans (it used to be 10c but then all the telecoms simultaneously jacked up prices and somehow this wasn't considered collusion)

I don't use $5 worth per month so I have no reason to buy a bundle of 250.

Look, it should be set as follows: (and separate for data, text, and minutes if they're separately billed for)

also, this does not necessarily apply to only mobile phone companies, but should equally apply to all service accounts, including Internet, residential phone, VoIP, power, water, etc. Anything that has an escalating monthly cost based on usage where a bill might be capable of exceeding 50% higher than the average bill or 25% higher than the average bill for that month in the previous year if that data exists.

1) at 80% of the monthly allotment, the user receives an SMS message (sent at no charge) or e-mail or other electronic alert if SMS is not an option on the device, from the carrier warning they they are approaching that limit. The time and date this message is received by the device (not when its sent) should be logged. On shared or family accounts, every device in the account gets that message. The message is sent again at 100%. These messages includes the default plan rate information for overage per minute/text/MB.

2) if the warning about reaching 80% use is not received by the device prior to crossing the 90% threshold, the existing utilization is noted at the time the message is received, and a new higher cap is set equivalent to the normal distance between that point and what would have been 10% than the original cap. (if you have 1,000 minutes, and get the 80% warning at 960 (96%), you can go to 1060 minutes before inuring overages). This permits customers appropriate time to react to current status and avoid overages.

3) for phones, Internet, and entertainment services, users can set a hard limit for overage fees in a calendar month. This includes use of carry-over minutes, which can have a separate limit so a user can cap plan usage both before incurring fees and before exhausting all available overage minutes. After either is reached the plan would be cutoff without further action from the subscriber.

4) a notification to users if they exceed their plan limit 2 months in a row, allowing them to automatically jump to a higher tier plan if doing so costs less than the average of the 2 month's overage charges. This must not extend a plan contract, must not purge existing rollover minutes, and can be returned to a lower plan tier at any time also without purging accrued rollover minutes but the carrier may reserve the option to only lower the plan again on request.

5) default cumulative overage cap at 50% or $50 of monthly plan price, whichever is met first. This can be adjusted higher only by opt-in. Opting to exceed this limit does not change the limit permanently unless that is also clearly expressed, and only if a higher tier plan does not cost less. Excess overages beyond this amount incurred without user consent must be waived automatically. Voluntarily exceeding this cap must include a higher cap being set which would incur its own further warnings (not simply saying "go over as far as i need without regard for the bill")

6) Internet should be throttled after a cap is met, not cut off. These caps should only apply on the lowest tiers of internet service, and options for uncapped plans at any tier must exist. For example, If I want an uncapped 2dn connection, i should be able to pay a higher rate than a capped plan at 2Mbit, but no so high as that rate exceeds the reasonable download limit of 30 days of a higher capped plan. For example, if there's an 8dn plan with a 500GB limit, and it's not reasonable I could hit that limit on a 2Mbit plan, the cost for an uncapped 2Mbit plan should not exceed that of the 8mbit plan... Additionally, beyond the warnings sent for approaching limits, and being able to upgrade a plan on demand to accommodate overages as with phones, throttling should be in 3 tiers: throttle to 50% plan bandwidth at cap. Filter to 25% bandwidth at 10% over the cap, and filter to a simple 1.5/256 minimum connection beyond that. There are no overage charges, only throttling...

I don't know the specifics of it (and it was originally a landline thing, so I don't know if it extends to cell use) but the telecom companies in Canada are required to waive one bill (per lifetime) from a customer who complains about excessive rate surprises. (Or, at least, they were when I lived there!)

This is about unclear (and ridiculous) data rates for using a plan outside of the intended geographical region... not inside it where everything is just fine.

I pay $9.99/mo for unlimited 3G data for my laptop (about the same for my phone but it's soft-capped to 5GB/mo due to a carrier that is a better choice for voice) and it usually gets ~200KByte/s when traveling inside the country - splendid. It's just that if I don't turn it off when crossing a border, a chock-bill could arise from little to no provocation - like suddenly I'm being charged a fiver or more per MByte just because a boat crossed the sea into the wrong country - and that quickly adds up when people are used to flat-rate. A warning or cost-cap is suddenly useful - but more balanced rates across borders would be much better.

I like this idea. 99% of the time I'm for the free market. I go for free market choices of wages, prices, etc,

I'm just curious, but does this mean that you are against tariffs, subsidies, and minimum wage laws?

Quote:

but these phone bills are clearly abusive. We can have an almost-free market where people have to be given the option to cap their expenses before at least being informed of their situation.

There is really nothing about having that option that is contrary to the idea of a free market, unless you are referring to the government using its regulatory powers to force the providers to give consumers this option.

Every phone and computer has a price gauge. The moment you start a call, internet, etc, the gauge starts up, and ramps according to how much per-minute you're being charged. You can quickly pull the phone away from your ear, see that the gauge reads $100, say "WTF?!", and hang up. Proactive Prevention.

The problem is (as others have said) predatory rates/contracts, lack of info letting folks know up-front what they'll get charged before they commit to a call/etc, and lack of info keeping folks informed AS THEY INCUR the charges.

Phones and computers are smart enough to read this info off of networks. Just make them smart enough to display it live to the customers.

Oh, yes, but that would pull the curtain back on the whole magic show, and prevent them from "legally" charging obscene amounts of money.

so ... do they provide free use of the #MIN *BAL etc commands, or do they charge the same extortionate rates as normal texts?

Sorry to be harsh, but what are you thinking that pay exorbitant rates for texting? We pay $30 a month for 5 people unlimited texting to anyone anytime. It works out to like a penny a text (I have a teenager!). For $5 a month you can get 250 texts.

BTW all txt between you and Verizon are free.

A penny per text is pretty exorbitant, even then. A text message is essentially a single packet of data. If you were charged that kind of money for data transfer on a home PC, you would've spent years' worth of salary simply loading this page.

I like this idea. 99% of the time I'm for the free market. I go for free market choices of wages, prices, etc, but these phone bills are clearly abusive. We can have an almost-free market where people have to be given the option to cap their expenses before at least being informed of their situation.

People (like you) often forget that informed consumers are an integral part of what it means to be a free market. If the buyer is not able to find out how much they will have to pay for a product, as in this situation, then it is NOT a free market. The term "free" means non-coercion and non-fraudulence on BOTH sides of the transaction.

IMO, roaming billing rates should be sent to the phone (as a no-charge text) immediately upon connection, giving the consumer an easy opportunity to shut it down before the fees even start.

One caveat that could be added to get industry support is a "Notify" option that allows you to Set limits, and when you hit that limit, your phone company can send you a text message that says "You have hit $500.00 for this month, if you would like to incur costs, please reply "YES" to this message. Thank You."

Then everybody is happy, customers know what they are being charged, and can continue service if they are in some sort of emergency, and phone companies are just telling the customers what they are being charged.

Every plan should have such 80%/100% warnings and options on how to deal when you get over 100%, it sounds only logical. I'd go even further and would like a roaming option never to use any career with rates above the usual rate for roaming. Even if their rates won't get me over the plan, I just don't want to use such costly services without approval. Not sure if it's technically possible to find out the cost of a call before you even make it.

Similarly, all text messages and incoming calls should be free, at least within a limit, or I should have the possibility to automatically deny all incoming calls that are not free, or be warned for text messages above the limit.

I like this idea. 99% of the time I'm for the free market. I go for free market choices of wages, prices, etc, but these phone bills are clearly abusive. We can have an almost-free market where people have to be given the option to cap their expenses before at least being informed of their situation.

p.s. Verizon has a great plan. I never thought of those folks as pro-consumer before. My guess is that they still aren't pro-consumer when it's their own money on the line instead of avoiding paying a third party.

It's NOT a free market if you don't know what it costs until it's too late.

How about a rule like "you can't charge roamers any more than the top 10% of your customers pay for the same service"?

It's NOT a free market if you don't know what it costs until it's too late.

How about a rule like "you can't charge roamers any more than the top 10% of your customers pay for the same service"?

When you signed up for service, were you not aware that you pay $X per month for Y minutes/text messages, and that if you went over this amount, you now had to pay $Z per minute/message? I don't think that the carriers go out of their way to inform you of how close you are to your limits, but they don't try to hide it from you either. When I log in to T-Mobile's website, the first thing I see is a meter showing me how many minutes/messages I have used so far this billing period.

I'm pretty sure that T-mobile's new data structure gives you your first 5GB of your data plan at the maximum speed, then once you hit your cap, you just get data at a much reduced rate, rather than hitting you with absurd billing or a cut-off. Sounds like a very friendly solution.

Text messages when you are close to hitting your limits also sounds like a consumer-friendly option. I'm sure overages were set up as a big money maker to begin with, but they're turning into PR poison, as they should be.

Every phone and computer has a price gauge. The moment you start a call, internet, etc, the gauge starts up, and ramps according to how much per-minute you're being charged. You can quickly pull the phone away from your ear, see that the gauge reads $100, say "WTF?!", and hang up. Proactive Prevention.

As I understand it, sometimes your carrier doesn't KNOW how much they'll be charged ahead of time when you're out of your area.

For light cell usage, I prefer Tracfone - around 10c/minute when you buy the larger cards. My wife and I usually average $15-20/month combined, even with heavy (for us) usage. And, it shows you how many minutes you've used, and how many you have left. Easy as pie.

It is a good idea to protect us consumers.And if you really use your brain just seeing that folks have to pay out thousands of dollars in overcharges for a mistake !!! This just shows how greedy some companies are and WHY WE NEED PROTECTION.WE don't want goverment in our lives but when this world is full of greedy companies and shysters like Madoff who will protect you ?

I agree with Tundro Walker. The best way of prevention is knowledge or accounting.

Force the cell companies or makers to create a system that offers the cost per minute of calls before you hit connect, and log the information for 60 days on the phone so the customer can compare against the wireless provider's billing.

Then someone could make an independent website/software that can read the phone logs and compare the person's usage to cell phone plans to find the best deal for them.

When I bought an iphone (before giving it away...well, because its a total apple piece of shit) from Telia (a telco here) I got a gig of bandwidth as well... everytime i came close to exceeding my allotment I get a notice from them... i really dont get how you guys dont have a similar system there

It's NOT a free market if you don't know what it costs until it's too late.How about a rule like "you can't charge roamers any more than the top 10% of your customers pay for the same service"?

When you signed up for service, were you not aware that you pay $X per month for Y minutes/text messages, and that if you went over this amount, you now had to pay $Z per minute/message?

Rico, you need to pay attention. This entire article is about ROAMING CHARGES. When you're out of country (which happens a lot in Europe, especially compared to the USA) often you don't even know the name of the company whose towers happen to cover you at the moment, much less their billing rates, and whether they have extortionate surcharges on travelers but not locals.

How much sense would it make to say they couldn't charge obscene rates in the first place? If they can afford to have plans with unlimited minutes for $50 a month, then there's simply no reason to charge anyone more than that. Cap my bill at $50, at which point I can talk all I want.

And while we're at it, since a text message uses CONSIDERABLY LESS bandwidth than a minute of talk, why do we charge so much MORE than a minute's worth of money for one? 1 text can't possibly cost the network more than a minute's talk.

Since the technology exists to round to the nearest tenth of a minute (some companies do this), let's start doing that, and charge 1/10 a minute for a text. At least do it for those of us who only send less than 5 a month.

Yeah, that's it, 5 free texts a month for everyone, and first minute's free. I'd sign up with that!

I like Verizon's price structure. I spoke on the phone to one of their representatives once. I subscribed to a data plan, and asked how much it cost if I went over my limit. At first the guy would only say that it would be a massive amount of data to go over, and that it would never happen. Then when I persisted, he said $0.02 per kilobyte or something stoopid like that. I quickly did the math, and asked him, does it seem strange that the first 100 MB cost $50/mo and the next 100 MB cost $2000 or something like that. He didn't seem to get it.

I like this idea. 99% of the time I'm for the free market. I go for free market choices of wages, prices, etc, but these phone bills are clearly abusive. We can have an almost-free market where people have to be given the option to cap their expenses before at least being informed of their situation.

p.s. Verizon has a great plan. I never thought of those folks as pro-consumer before. My guess is that they still aren't pro-consumer when it's their own money on the line instead of avoiding paying a third party.

The thing is, wireless providers are not a free market. They buy a monopoly from the government (this is due to limited bandwidth and interference)...If the government sells monopolies to private companies, then you do not have a free market, and you must regulate said monopolies to avoid abuse.